What is Simplify Volatility Premium ETF?
Simplify Volatility Premium ETF is an alternative ETF that employs a fund-of-funds structure and extensive use of derivatives.
At its core, the ETF holds other Simplify ETFs, U.S. Treasuries, and sells S&P 500 index options with a target weight of 50% or less to generate steady income.
To further enhance income, the ETF actively shorts CBOE Volatility Index (VIX) futures, aiming for about 30% of the portfolio, which benefits investors when market volatility declines or remains stable.
To manage tail risk from a sudden spike in volatility, around 5% of the portfolio is allocated to hedges in the form of long VIX call options, which rise in value during volatility surges, and long S&P 500 put options, which gain when equity markets fall.
The final portion of the portfolio is dedicated to potential capital appreciation through S&P 500 ETFs, E-mini futures contracts, and long S&P 500 index options.
Simplify Volatility Premium ETF’s stated objective is to deliver a distribution rate targeting the federal funds rate plus 10%, while maintaining net asset value stability.
Exchange-Traded Fund (ETF)
How to buy Simplify Volatility Premium ETF
- Open your brokerage app: Log in to your brokerage account where you handle your investments.
- Search for the ETF: Enter the ticker or ETF name into the search bar to bring up the ETF's trading page.
- Decide how many shares to buy: Consider your investment goals and how much of your portfolio you want to allocate to this ETF.
- Select order type: Choose between a market order to buy at the current price or a limit order to specify the maximum price you're willing to pay.
- Submit your order: Confirm the details and submit your buy order.
- Review your purchase: Check your portfolio to ensure your order was filled as expected and adjust your investment strategy accordingly.
Holdings of Simplify Volatility Premium ETF
Because of its complexity, the holdings of Simplify Volatility Premium ETF can look long and confusing at first glance. As of August 2025, they could be broken down into several key components.
First is the allocation to other Simplify ETFs, using a fund-of-funds structure. These include various fixed-income strategies and hedged equity strategies.
The most notable position is the short VIX futures overlay. In August 2025, the ETF was short September 2025 VIX futures at roughly -31% of its national exposure.
Finally, there is a mix of derivatives. Some, like long S&P 500 index puts and long VIX calls, are designed to hedge against sudden volatility spikes. Others, such as long S&P 500 index calls and U.S. bond futures options, aim to help maintain net asset value stability.
The portfolio also holds Treasury bills as collateral to support its derivatives exposure.
Simplify Volatility Premium ETF is actively managed and its allocations can shift quickly in response to market conditions, so investors should not expect a static basket of holdings.
Should I invest in Simplify Volatility Premium ETF?
Simplify Volatility Premium ETF is best suited for advanced investors who are already earning income from stock dividends and bond interest, and are now looking for an alternative source beyond the usual real estate investment trusts (REITs) and master limited partnerships (MLPs).
Its short VIX futures exposure can provide returns that are less than perfectly correlated with traditional equities and fixed income, which may help with portfolio diversification.
However, the strategy comes with tail risks. Sharp spikes in volatility can cause large and rapid losses. While this ETF allocates part of its portfolio to long VIX calls and S&P 500 puts to hedge against this, those measures offer only partial protection.
The ETF can lose, and has lost, significant value during periods of high market volatility.
Does Simplify Volatility Premium ETF pay a dividend?
Simplify Volatility Premium ETF pays a distribution rather than a traditional dividend, since the source can be a mix of dividends, ordinary income, and return of capital. As of June 2025, its distribution rate was 19.52%, calculated by annualizing the most recent monthly payment. The rate can fluctuate depending on market conditions and the fund’s income generation.
Expense Ratio
What is Simplify Volatility Premium ETF’s expense ratio?
Simplify Volatility Premium ETF has a total expense ratio of 0.72%, or $72 annually for every $10,000 invested. This is composed of 0.50% in management fees, 0.15% in other expenses (mostly interest expenses), and 0.07% in acquired fund fees from the indirect cost of allocating to other Simplify ETFs. While high compared to traditional equity ETFs, the level is about average for the alternatives segment.
Related investing topics
Historical performance of Simplify Volatility Premium ETF
1-Year | 3-Year | |
Net Asset Value | -8.63% | 8.65% |
Market Price | -8.62% | 8.62% |
The bottom line
Simplify Volatility Premium ETF is essentially a hedge fund in an ETF wrapper. It offers the potential for very high income, but that comes with meaningful tail risk.
You might enjoy months of strong distributions before one sharp spike in volatility wipes out a significant portion of returns, and those payouts may not fully make up for the loss. There is no guarantee the net asset value will remain stable or that the distribution size will be maintained.
The strategy is complex, tax-inefficient in many cases, and highly dependent on Simplify’s management decisions. For risk-seeking investors who understand the trade-offs, it can be a potent source of yield, but it is not for conservative or inexperienced investors.
